What Is A Credit Reference Agency? | Credit Agencies

A credit reference agency (CRA) is an independent company that securely collects and holds data about you, including your financial history.

When you apply for finance, such as a credit card, loan, or mortgage, the lender will run a credit check – or credit search – with a credit reference agency.

How do credit reference agencies work?

There are 3 main credit reference agencies in the UK:

Experian
Equifax
TransUnion

Each agency uses a slightly different method and data to create a credit score – a 3-digit number that indicates how reliable you are at borrowing and repaying money.

Your credit score is calculated using a points system, based on what’s in your credit report.

Lenders and other companies use this information, among other factors, to decide whether to accept your application. They may also use it to decide how much they’re willing to lend you through a loan or mortgage, or what your credit limit on a credit card should be.

What information do credit reference agencies hold?

The data each CRA holds may differ, but will include information like:

Your name
Your address
Whether you’re on the electoral roll
Any person you might have a financial association with, such as a partner
Whether you have any county court judgements (CCJs) against you or have filed for bankruptcy
Information from utility suppliers on whether you have missed any payments
If you already have credit, and how well you manage it
The total amount of credit you have access to

To keep the credit scoring system secure, the exact details each credit agency holds are not made public. The information they collect comes from publicly available sources and privately held data from companies who agree to share it.

Are credit scores different between agencies?

The 3 main CRAs all use slightly different scoring systems to work out your credit score. But the principles behind them are the same.

Different lenders may report to different CRAs when you apply for credit.

Improving your credit score before you apply can give you a better chance of getting approved. If you have a poor credit score, you may find your application isn’t accepted, or you could be offered a higher interest rate.

Are credit reference agencies regulated?

Credit reference agencies are regulated by the Financial Conduct Authority (FCA) This link will open in a new window. This is because they are handling data concerned with credit. They are also covered by the Consumer Credit Act of 1974.